Billionaire Peter Thiel, who co-founded PayPal, told FOX Business while he’s skeptical of most cryptocurrencies, bitcoin is “very underestimated.”
“It’s like a reserve form of money. It’s like gold and it’s just a store of value. You don’t actually need to use it to make payment,” he told Maria Bartiromo during an interview at a conference in Riyadh, Saudi Arabia.
Bitcoin has soared to a record this year, up 500% and trading near the $6,000 level, as tracked by Coindesk.
There has been much debate by the world’s top bankers over how the virtual currency actually works. Unlike new money in a conventional financial system, bitcoin is not backed by any government or central bank, such as the Federal Reserve.
In September, Jamie Dimon, chairman and CEO of JPMorgan Chase (NYSE:JPM) called bitcoin a “fraud” and said it will eventually blow up.
"The currency isn't going to work. You can't have a business where people can invent a currency out of thin air and think that people who are buying it are really smart," Dimon said while speaking at an investor conference.
However, Thiel proposed a different take: “The argument it’s based on is the security of the math which tells you it can never be diluted by government… it can’t be hacked and it’s a form of money that’s… secure in an absolute way.”
BlackRock CEO Larry Fink (NYSE:BLK) has called it an “index for money laundering,” and most recently, Saudi Prince Al-Waleed predicted it would implode.
Created in 2009, the controversial currency is the first semi-anonymous peer-to-peer network powered by its users and has a market cap of over $70 billion, as compared to gold, which is worth trillions, according to Thiel.
“If bitcoin ends up being the cyber equivalent of gold and it has a great potential left and it’s a very different kind of thing from what people in Silicon Valley focus on—companies, not algorithms not protocols, but this might be maybe one exception that is very underestimated,” the Silicon Valley elite said.
Even so, in Thiel’s opinion, like gold, it’s difficult to mine, making it more worthwhile.
“You can ask the same questions about gold. What is gold based on? Why is gold valuable?... It’s a tangible asset but it’s also hard to mine. So if it was easy to mine then it wouldn’t be that valuable and we would just have way more gold. So bitcoin is also, it’s mineable, like gold it’s hard to mine, it’s actually harder to mine than gold and so in that sense it’s more constrained,” he said.
Other CEOs such as Overstock’s (NASDAQ:OSTK) Patrick Byrne share some of Thiel’s views and slammed bitcoin critics during an interview on FOX Business. Byrne is also betting on its future, in September an arm of his company announced a fully regulated digital coin trading exchange step toward creating an entire Wall Street exchange using cryptocurrencies.